House Move Dilemma

BRISTOL86

Hi All

Need to chat over a house move dilemma that has me torn between two courses of action. 

As a rule I tend to over think these things - which is probably a good thing - however I drive myself mad mulling over every possible scenario and some fresh eyes on the matter from people who aren’t emotionally involved is always a good thing. 

To set the scene, lady Bristol and I are in our early thirties and moved into our first house approx 3 years ago. Arrived at that juncture later than most people our age because we spent time in our 20s living beyond our means, which has made us debt cautious.

Our house has appreciated in value and we are in a position where we could use the equity to trade up to a bigger property (ours is a small 3 bed semi, target decent size 4 bed detached).

No kids but would likely try in a couple of years. Both fairly relaxed about whether or not it happens - what will be will be. 

Current mortgage balance (which as things stand would see us into our mid 60s until mortgage free) is around 3 x our gross annual salary and the monthly payment is only around 15% of take home pay. 

New mortgage would be considerably more (4.5 x gross annual salary) and monthly payment would be around 25% of take home pay. 

After all essential bills and food, fuel etc we would be left with c. 50% of our salary as genuinely disposable (as things stand that figure is around 60%. 

If we stay put, we are being uber cautious - and could probably knock 10-15 years off the overall length of the mortgage and still live comfortably. There is a good lot of money left over each month for holidays, dining out etc. We are not very exposed to rate rises or falling house prices or the loss of income that having kids would result in. 

However the house feels small even for two of us and a cat with no kids and I can’t imagine raising kids there (though I appreciate that a lot of people do in considerably worse circumstances than me!) 

If we move then clearly we’re stretching more, but how does one decide if the stretch is too much? On the face of it we are still left with a good sum of disposable income but we’d have to resign ourselves to knowing that if we did have kids, we’d probably be living mostly payday to payday. But I suppose that’s fairly normal for most people. 

We’d also be more sensitive to rates and house price changes (we’d be at 90% LTV instead of 80%) and we’d need to accept that there will be less money for luxuries. 

The trade off is that we have found a house that we could genuinely see ourselves in, with kids, for the next 30 years. 

Having lost a colleague in an horrific RTA a couple of years ago, who had worked his whole life and was just getting ready to enjoy retirement and everything he’d worked for - part of me wants to just dive in and do it. But I still have that nagging doubt and it’s driving me mad. Long term it’s hard to lose in property....isn’t it? It seems that getting into the best place you can realistically afford ASAP is the sensible thing to do? Especially as more and more people seem to be looking to decamp from London - Bristol property rises are mad (look at us - c. 20% rise in 2.5 years) 

What would you do? Stick or twist? 

Sorry that was quite a lot of waffle but needed to get it out!!

richardhomer

Personally I’d make the move. Other than pride - there’s no reason why you can’t move down again if something goes horribly wrong - or later in life when you may want to ease your mortgage burden. And houses - if kept long enough - always go up in value....

crunchman

If you really like the other place I'd be tempted to go for it.

Wages are likely to rise because of inflation while the mortgage will stay static.  Wage growth is around 2.5% per year at the moment.  If that continues for 4 years you have 10% more money (more than that as it will compound) but the underlying mortgage will stay the same.

Obviously it depends on what kind of jobs you are in.  It may be difficult for you to negotiate pay rises but in 10 years time, the mortgage is likely to be smaller relative to your income.

At your age, there might be chances of promotion in the future as well.

The other option is to stay put where you are for a couple of years and overpay on your existing mortgage.  If you could afford to pay £500 per month off then you would have £12k more equity from overpaying.  You would actually have more than that as your normal payments will be making a dent in the equity as well.

Guitar_Slinger

Twist, IMHO easier to do before you have kids. Me and the wife have been huffing and puffing over it since our six year-old started school but firstly, there's less time to drive around looking with a child in tow. Also, I'm refusing to consider moving until the hoarder I live with has a big ol' de-clutter.

joneve

you'd have 50% of your take home pay as disposable income? 

Why have you not done it yet? I (we) have precisely zero disposable income currently after food, bills and whatnot have been taken into account. But we have a nice 3 bed house, in a suburb of gloucester, right on the edge of the countryside, with a great community and great neighbours. We now have an 11 week old baby boy and a 2 year old springer spaniel, so I'm pretty happy. 

If I had 50% of my monthly pay as disposable income, I'd be even happier, as I'd actually be able to afford to go on holiday with my family or do stuff we can enjoy as a family. 

Just fucking do it (in the nicest possible way ), Bristol house prices are continuing to rise (as you say), so if you can afford it now (which you can), then dive right in mate. No point living for tomorrow. 

BRISTOL86

Thanks both. Salary wise I’ve hit the top of my band in work but we get an annual rise that is normally inflation linked (just announced 4.2% this year) so I think I’ll do reasonably well out of ‘natural rises’ as my company are very good for that. And whilst no one can say thy have absolute job security, people who have been here 20 years are still considered ‘new’ (!)

I think I’m probably being over cautious which isn’t always a bad thing but we really want to go for it. It’s just such a big increase in borrowing (basically 50% more in terms of overall mortgage) that it’s causing me a bit of anxiety. 

BRISTOL86

joneve said:

you'd have 50% of your take home pay as disposable income? 

Why have you not done it yet? I (we) have precisely zero disposable income currently after food, bills and whatnot have been taken into account. But we have a nice 3 bed house, in a suburb of gloucester, right on the edge of the countryside, with a great community and great neighbours. We now have an 11 week old baby boy and a 2 year old springer spaniel, so I'm pretty happy. 

If I had 50% of my monthly pay as disposable income, I'd be even happier, as I'd actually be able to afford to go on holiday with my family or do stuff we can enjoy as a family. 

Just fucking do it (in the nicest possible way ), Bristol house prices are continuing to rise (as you say), so if you can afford it now (which you can), then dive right in mate. No point living for tomorrow. 

I’ve taken a bit of artistic licence there tbh, as my figures are stated after repayment of a car loan which would be happening if we move as I will downgrade the car (and also compared figures after my pay rise in the ‘new house’ scenario and on my current salary in the ‘stay put’ scenario) 

I think as you say though, JFDI does apply. I guess my main worry is buying now at what could realistically be the crest of a wave whilst increasing our exposure as the LTV goes up.

Getting stuck on a lenders SVR and/or being neg equity fills me with dread

Also all these figures are joint with Lady B (so 50% of joint income not just mine) and that’s with both in full time work (ie no kids) - though luckily her salary is the smaller one

joneve

As Richard said, if you keep a house long enough, you'll reap the rewards.

We bought our first flat, right at the peak of house prices, before everything went tits up in 2008. Paid £147k for a two bed flat. It proceeded to then become worthless (or worth less than 100k), so we were sat on a lot of negative equity and were stuck. 

We saved and with a little help from family, were able to secure a mortgage on a second home, whilst keeping the flat to rent out, whilst we continue to pay off the mortgage until such a time that we can break even (or make a small bit of profit) from selling it, or we may choose to keep it long term as a retirement investment. Negative equity is only negative equity if you choose to sell. 

As I say, if you have any form of disposable income after bills etc, then I'd go for it. You'd have money to enjoy life and a nice new house for you and your other half - this is the dream surely? you've got the luxury of having a pot of money each month, some of which you could invest/save/over pay your mortgage to get your LTV down pretty sharpish, in case anything goes pear-shaped. 

With my wife currently on Maternity Leave, we'd be a wee bit shafted if anything major happened right with the housing market/interest rates in the coming years (we're locked into a fixed rate until the end of the year at least, and for the next 2 years on the flat).

Put it this way - if we were in your situation, we (aka my wife ) would have already found a house and signed on the dotted line. 

Phil_aka_Pip

I'd overpay the existing mortgage, tart up the existing house (if it needs it), look around for the next house, and put the existing house on the market as soon as it is fit for it.

You're not under any pressure to sell, so you can afford to wait for the combination of right price offered for existing house and next (ticks-all-boxes) house offered for sale at a price you can pay.

Nice position to be in

CarpeDiem

I would move. Over the long term, house prices generally rise so I would do it whilst you can, and you have sound reasons for moving. If you don't, you may not get the same opportunity in the future, or you may regret not having done it. Whilst it's good to think things through, the danger of over analysing every possibility can lead to inertia.

BRISTOL86

Thanks all, I really appreciate the responses (and am pretty happy that the consensus is ‘go for it’ given how we’ve already found the place we love and are actively trying to sell ours!) 

We’ve already been over all this together of course but when you’re so close to the situation it’s easy to talk yourself in or out of it without realising that you’re not being objective. 

@joneve you make a good point about it not really being negative equity unless you sell - my main worry was getting into a position where we couldn’t remortgage and get the LTV down and thus get stuck for years on an unfavourable SVR which would likely be 4-5%. Going in with only 10% would increase our exposure to that risk but in all honesty I think we’d probably do a 5 year fix and look to overpay/save wherever possible depending what life throws....security of 5 years of fixed payment would probably outweigh the extra 0.5% rate saving.  

munckee

BRISTOL86 said:

joneve said:

you'd have 50% of your take home pay as disposable income? 

Why have you not done it yet? I (we) have precisely zero disposable income currently after food, bills and whatnot have been taken into account. But we have a nice 3 bed house, in a suburb of gloucester, right on the edge of the countryside, with a great community and great neighbours. We now have an 11 week old baby boy and a 2 year old springer spaniel, so I'm pretty happy. 

If I had 50% of my monthly pay as disposable income, I'd be even happier, as I'd actually be able to afford to go on holiday with my family or do stuff we can enjoy as a family. 

Just fucking do it (in the nicest possible way ), Bristol house prices are continuing to rise (as you say), so if you can afford it now (which you can), then dive right in mate. No point living for tomorrow. 

I’ve taken a bit of artistic licence there tbh, as my figures are stated after repayment of a car loan which would be happening if we move as I will downgrade the car (and also compared figures after my pay rise in the ‘new house’ scenario and on my current salary in the ‘stay put’ scenario) 

I think as you say though, JFDI does apply. I guess my main worry is buying now at what could realistically be the crest of a wave whilst increasing our exposure as the LTV goes up.

Getting stuck on a lenders SVR and/or being neg equity fills me with dread

Also all these figures are joint with Lady B (so 50% of joint income not just mine) and that’s with both in full time work (ie no kids) - though luckily her salary is the smaller one

Just one thing to add, not saying stay or go but if you start adding little bristols (sounds wrong) to the planet there will be some jiggling to do with lifestyles and finances, particularly if either Mrs Bristol (or you) want to stay at home with a little Bristol your incomes will be different.

Not a negative just a point : )

BRISTOL86

munckee said:

BRISTOL86 said:

joneve said:

you'd have 50% of your take home pay as disposable income? 

Why have you not done it yet? I (we) have precisely zero disposable income currently after food, bills and whatnot have been taken into account. But we have a nice 3 bed house, in a suburb of gloucester, right on the edge of the countryside, with a great community and great neighbours. We now have an 11 week old baby boy and a 2 year old springer spaniel, so I'm pretty happy. 

If I had 50% of my monthly pay as disposable income, I'd be even happier, as I'd actually be able to afford to go on holiday with my family or do stuff we can enjoy as a family. 

Just fucking do it (in the nicest possible way ), Bristol house prices are continuing to rise (as you say), so if you can afford it now (which you can), then dive right in mate. No point living for tomorrow. 

I’ve taken a bit of artistic licence there tbh, as my figures are stated after repayment of a car loan which would be happening if we move as I will downgrade the car (and also compared figures after my pay rise in the ‘new house’ scenario and on my current salary in the ‘stay put’ scenario) 

I think as you say though, JFDI does apply. I guess my main worry is buying now at what could realistically be the crest of a wave whilst increasing our exposure as the LTV goes up.

Getting stuck on a lenders SVR and/or being neg equity fills me with dread

Also all these figures are joint with Lady B (so 50% of joint income not just mine) and that’s with both in full time work (ie no kids) - though luckily her salary is the smaller one

Just one thing to add, not saying stay or go but if you start adding little bristols (sounds wrong) to the planet there will be some jiggling to do with lifestyles and finances, particularly if either Mrs Bristol (or you) want to stay at home with a little Bristol your incomes will be different.

Not a negative just a point : )

A very good point and tbh a very big part of he anxiety I have about the choice ahead. If we knew now that we’d never have kids then it’s a no brainer, but then to not do it because ‘we might’ is also a little daft. 

So as always the middle ground is probably where it’s at - go for it, but go eyes wide open into it and consider the risks and potential downsides. 

joneve

BRISTOL86 said:

Thanks all, I really appreciate the responses (and am pretty happy that the consensus is ‘go for it’ given how we’ve already found the place we love and are actively trying to sell ours!) 

We’ve already been over all this together of course but when you’re so close to the situation it’s easy to talk yourself in or out of it without realising that you’re not being objective. 

@joneve you make a good point about it not really being negative equity unless you sell - my main worry was getting into a position where we couldn’t remortgage and get the LTV down and thus get stuck for years on an unfavourable SVR which would likely be 4-5%. Going in with only 10% would increase our exposure to that risk but in all honesty I think we’d probably do a 5 year fix and look to overpay/save wherever possible depending what life throws....security of 5 years of fixed payment would probably outweigh the extra 0.5% rate saving.  

Oh of course. We've benefitted from lower interest rates the last ten years - and ended up staying on a SVR at our flat for a few years after our first fixed term ended (2 years) as it was lower than our original interest rate and we knew trying to re-mortgage with another lender would likely mean we'd be re-valued and have issues, so we over paid a bit, which helped get our LTV down a bit, until we needed the extra money to pay for a wedding. 

When it came time to "re-mortgage", as we'd over paid, we spoke to RBS (our lender), and they can (and did) use the "halifax price index", which meant that it increased the value of our house without it being valued, which made our LTV even better. So we're on a great rate now. Our flat has never been re-valued since we bought it, and we've stuck with RBS, mostly out of not having another option, but they've been great, and allow "Consent to Let", which, as long as you follow their guidelines, means you can rent your property out on a standard mortgage (no need for a buy to let)

But as you say, if you fix in for 5 years now, for stability, and can afford to overpay, you'd be surprised how quickly it brings down your LTV. 

BRISTOL86

Yep I think that a 5 year fix with overpayments wherever possible would be a smart move and will negate the sensitivity in the early few years. 

Fretwired

Move. House prices are still going up (there's the odd blip) so it will be easy to move back down the ladder in the future but may be harder to move up the ladder if prices rise above your ability to borrow money. Sounds like you've found a nice house.

shaunyshaun1234

We bought our first house 6 years ago and had our first child after 2.5 years. We then decided that it was the perfect time to move house.

We upgraded and it;s a good job we did at that time. We now have a second child and not a lot of extra cash knocking about! 

Do it before you have kids! 

fields5069

I think I would go for it, on the understanding that you could handle a 5% rise in interest rates. I think if you can handle 6-8% then go for it.

Also I guess it's important that you are "in it together" and would be happy eating baked beans 4 times a week to enjoy your new house.

BRISTOL86

Thanks all. You’ve helped put my mind at rest somewhat!

Of course it’s all largely irrelevant if we can’t sell our house promptly as the target house will likely be gone if not!

roundthebend

@BRISTOL86 ;
I obviously don't know enough about your circumstances, but I've moved house 4 times in the past and been nervous for various reasons on each one. I've always found out that my nerves were either misplaced, or over-stated. You'll make it work whichever option you choose. And you will frequently question whether it was the right choice, but you'll never know because you'll only have the imaginary circumstances to compare against your reality.

munckee

BRISTOL86 said:

munckee said:

BRISTOL86 said:

joneve said:

you'd have 50% of your take home pay as disposable income? 

Why have you not done it yet? I (we) have precisely zero disposable income currently after food, bills and whatnot have been taken into account. But we have a nice 3 bed house, in a suburb of gloucester, right on the edge of the countryside, with a great community and great neighbours. We now have an 11 week old baby boy and a 2 year old springer spaniel, so I'm pretty happy. 

If I had 50% of my monthly pay as disposable income, I'd be even happier, as I'd actually be able to afford to go on holiday with my family or do stuff we can enjoy as a family. 

Just fucking do it (in the nicest possible way ), Bristol house prices are continuing to rise (as you say), so if you can afford it now (which you can), then dive right in mate. No point living for tomorrow. 

I’ve taken a bit of artistic licence there tbh, as my figures are stated after repayment of a car loan which would be happening if we move as I will downgrade the car (and also compared figures after my pay rise in the ‘new house’ scenario and on my current salary in the ‘stay put’ scenario) 

I think as you say though, JFDI does apply. I guess my main worry is buying now at what could realistically be the crest of a wave whilst increasing our exposure as the LTV goes up.

Getting stuck on a lenders SVR and/or being neg equity fills me with dread

Also all these figures are joint with Lady B (so 50% of joint income not just mine) and that’s with both in full time work (ie no kids) - though luckily her salary is the smaller one

Just one thing to add, not saying stay or go but if you start adding little bristols (sounds wrong) to the planet there will be some jiggling to do with lifestyles and finances, particularly if either Mrs Bristol (or you) want to stay at home with a little Bristol your incomes will be different.

Not a negative just a point : )

A very good point and tbh a very big part of he anxiety I have about the choice ahead. If we knew now that we’d never have kids then it’s a no brainer, but then to not do it because ‘we might’ is also a little daft. 

So as always the middle ground is probably where it’s at - go for it, but go eyes wide open into it and consider the risks and potential downsides. 

What I can tell you is you will be happy to stay in a lot more and probably conclude a lot of things you bought injcluding meals out etc were to kill time, and you will certainly have less time on your hands if you do make small people.

I would still go for it in your position btw.